A California bill could blow open the gig economy in the state, but Uber claims it still won’t have to call its drivers employees.
The gig economy’s biggest players are set for a legal battle following the passing of a new bill – called AB-5 – in the US state of California, which could potentially reclassify a large proportion of workers for the likes of Uber and Lyft as employees rather than contractors.
The bill would require those working for a company to take an ‘ABC test’ that would put them into a legal classification. This would include the person needing to prove that they’re working for themselves to be classified as a contractor.
Uber, as one of the companies most likely to feel the brunt of this new legislation, has reacted strongly to the bill, claiming that its drivers will still not qualify as employees because they aren’t a core part of its business.
In a prepared statement, Uber’s chief legal officer, Tony West, said: “Under that three-part test, arguably the highest bar is that a company must prove that contractors are doing work ‘outside the usual course’ of its business,” he said.
“Several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces.”
West also countered claims that the bill would automatically make its drivers employees on 1 January 2020, when it is likely to become law.
Uber’s claim that drivers are not counted as one of the core components of its business has been criticised by many on social media.
— Jordan Weissmann (@JHWeissmann) September 11, 2019
Woooooow. “Not core”. Not…core. https://t.co/zlOdJzA2gV
— Arlan ?? (@ArlanWasHere) September 11, 2019
Uber ‘no stranger to legal battles’
According to The Verge, an amendment to the bill could also expose companies such as Uber to increased litigation from California’s attorney general and district attorneys. It states that any city of a population of more than 750,000 can file injunctive relief against Uber if they believe the company is violating its provisions. According to the San Francisco Examiner, the city’s district attorney has welcomed such a strategy.
In response to this amendment in a call with reporters, West was quoted as saying that Uber is “no stranger to legal battles”. Uber and Lyft are now expected to spend upwards of $60m to advocate for a ballot initiative next year that would ask voters to support the re-classification of those working in the gig economy.
The news follows the revelation that 435 staff are to be let go across the company’s engineering and product teams. It was reported that 170 people will be cut from the product team, while 265 employees from the engineering team will be laid off.
In a statement, Uber said: “We’re making some changes to get us back on track, which include reducing the size of some teams to ensure we are staffed appropriately against our top priorities.
“These were incredibly difficult calls as it means some of our employees no longer have a role.”